Wednesday, June 01, 2005

Wow. Never thought I'd see this. Nathan Dugan of ShareSaveSpend recommends giving credit cards as gradauation gifts. But you know what? It really makes sense. Wouldn't it be better for you to help select the right credit card offer, and go through the process with your teen step-by-step, rather than have them accept the first free t-shirt-with-application offer on campus? And the second, and the third...

You'll have the summer before college to help them learn how to use the card and how to pay their bills. Have them buy everything over the summer with the card, check their status on-line, and even pull a credit report (although it may not have much on it.)

Why even wait that long? Start them even earlier with the M&D Credit Card. (That's Mom & Dad.) When son/daughter asks "Dad, can I borrow $10?" say "Sure -- put it on your M&D card." Charge interest and penalties. Demand a minimum payment. Set a credit limit. Assess over-the-limit fees if they go over. Heck, you can even let them declare bankruptcy and not extend credit to them for a year. Treat them like a credit card company with the M&D Card before they ever get their hands on a real one. They'll learn early that credit is expensive unless they pay their bill in full every month, and that there are consequences to not paying the bill.